Facebook faces lawsuit over sale of Credits to minors (Update)

An Arizona woman whose teenage son purchased virtual goods wants Facebook to give refunds to him and thousands of “minor children” who misrepresented their right to acquire the company’s online currency, Facebook Credits.

In a class action lawsuit filed in San Jose, Glynnis Bohannon is seeking millions for minors and their parents and guardians under California’s consumer protection laws.

The issue appears to turn on Facebook’s requirement that users not “provide any false personal information.” It may also turn on the company’s rules for using its currency such as:

If you are under the age of 18, you may make payments only with the involvement of a parent or guardian. You should review these Payments Terms with a parent or guardian to make sure that you both understand them.

In a related court filing, Manager of Payment Operation Bill Richardson writes that “users who are purportedly aged 13-17 purchased well in excess of $5,000,000 in Facebook Credits in calendar year 2011.” Facebook requires users to be at least 13 to sign on to the social network.

Facebook Credits are widely used in many games and apps and allow users to do things like purchase virtual sheep or play poker on sites like Zynga. The currency is a big money maker for Facebook which takes a 30 percent cut of all transactions.

The issue of minors who rack up online currency bills has become an issue for other companies like Apple which is facing a lawsuit over so-called bait apps. These are games that can be downloaded for free but then induce minors to make in-app purchases. Our editor, Kevin Tofel, experienced the problem first hand after his step-daughter treated the family to $375 worth of virtual fish.

In the past, commentators have been divided over whether selling virtual goods to minors is unethical or whether it is simply a parenting question for which the companies should not be responsible.

Under US law, contacts with minors are typically “voidable”, meaning that the minor has the right to back out of the agreement (there are of course exceptions).

Update: “We believe this complaint is without merit and we will fight it vigorously,” accordingly to Facebook spokesman Andrew Noyes.

Facebook describes the lawsuit in this request to move the case to federal court from state court where it was filed in March: